For now, the 10-year Treasury yield is holding onto the huge gain in posted yesterday, up two basis points today to 2.086%. TLT-0.4%, TBT+0.8%. Fed Funds futures have priced in about a 100% chance of a December rate hike.

The yield curve has shifted both higher and steeper - pure manna for the companies that borrow short and lend long. There's also a new sheriff coming to town, and bank investors are no doubt mulling an eased regulatory regime. KBE+2.45%, KBE+2.4%

Other takeaways are that the value of online brokerage is greater thanks to the recent DOL fiduciary rules, and that pricing competition is likely to ratchet higher.

For E*Trade, new management has asked for about two years to execute its growth strategy. If things don't work out by then, it would consider a sale, so the AMTD purchase gives management that time. Growth may come even easier, suggests Bedell, as E*Trade could lure some Scottrade or AMTD customers to its platform. Still, the additional price competition has Bedell trimming his 2017 and 2018 EPS estimates by 1% and 2%, respectively.

As for Schwab (NYSE:SCHW), Bedell doesn't see it participating in the consolidation trend, but he does anticipate the company being more aggressive on pricing, given its scale advantages and far lower reliance on trading revenue. Schwab, he says, could offer free trading for clients transferring large balances, and still make money on the deal. He nevertheless cuts his EPS estimates for 2017 and 2018 by 1% each.

As floated on Sunday, Scottrade has been sold to TD Ameritrade (NASDAQ:AMTD) for $4B. The deal will take place in two stages, with TD Bank (NYSE:TD) first buying Scottrade Bank for $1.3B in cash, and then Ameritrade purchasing Scottrade Financial Services for $4B, or $2.7B of stock and cash net of the proceeds of the bank sale.

Ameritrade will issue $1B in new stock (28M shares) to Scottrade, and the $1.7B in cash will include $900M of its own money, $400M in new debt, and $400M raised by selling another 11M shares to TD Bank.

Thanks to about $450M in combined annual expense synergies, Ameritrade expects 15-20% adjusted EPS accretion in years two and three following the close. Another $300M in longer-term cost savings are hoped for as well.

TD Ameritrade (NASDAQ:AMTD) would acquire Scottrade's brokerage operations for about $2.7B in cash and stock, and TD Bank (NYSE:TD) would pick up Scottrade's banking business for $1.3B in cash, reports Bloomberg. TD Bank owns roughly 42% of Ameritrade.

The acquisition would be the latest in an industry which has seen a good deal of consolidation of late as players deal with slowing volumes - Ameritrade saw 425K client trades per day in August, down 21% Y/Y, and E*Trade's 144K was off 20% (though it's a tough comparison given the massive volatility in August 2015).

Scottrade had $1.04B in revenue in 2015, according to Wells Fargo's Christopher Harris. Revenue, however, has been flat since 2014. That, along with serious health issues for co-founder and CEO Rodger Riney could be pushing along the decision to sell.

According to Rob Sedran and team at CIBC, TD Bank (NYSE:TD) has the necessary regulatory capital to inject about $1.5B into its minority-owned TD Ameritrade (NASDAQ:AMTD) should it pursue a purchase of rival Scottrade.

Scottrade has reportedly put itself on the block at somewhere in the $4B range, and a report today says TD and AMTD have teamed up to put in a joint bid.

TD owns 42% of Ameritrade, and Sedran believes the lender would want to maintain that level in the event of a Scottrade purchase.

It would be "strategically consistent" for TD to be involved in the buy, says Sedran, noting Scottrade's banking assets could be easily absorbed the direct brokerage is a business the lender knows well and with whom it has a strong partner, and in which material synergies could be expected.

Catching an upgrade to Buy from Neutral is TD Ameritrade (NASDAQ:AMTD), with analyst Michael Carrier seeing upside from higher interest rates, and other factors like M&A (rumors of Scottrade interest) and competitive pricing. The $43 price target is up from $33, and suggests another 20% upside from current levels.

The big rise in TD Ameritrade (AMTD+2.2%) of late "amply discounts" the most likely accretion scenarios, says Citi's William Katz, but leaves no room for a bad outcome such as E*Trade or a third party winning the bidding for Scottrade. "We are inclined to fade the rally, particularly as rate expectations remain largely muted."

In addition to rumors about an Ameritrade purchase of Scottrade, there's also chatter about an Ameritrade/E*Trade tie-up. Of the two, Katz thinks a deal with Scottrade is more likely given its smaller size and more manageable revenue "dis-synergies" and cost reductions.

Among those with interest is TD Ameritrade (AMTD+5.2%), according to the story. With the industry struggling with sluggish trading volumes, low interest rates, and lower-cost rivals, a purchase would give Ameritrade the opportunity to profit by eliminating redundant back-office systems while bringing in new customers, says Bloomberg's David Ritter.

The industry is facing three disruptive threats, says analyst Michael Cyprys: Competition for customer assets/activity, a growing regulatory burden, and technologies that can transform business models.

Advice is the key, he says, and moving into this segment opens up a $22T wealth pool for the brokers.

His favorite is Charles Schwab (NYSE:SCHW), as it has the most diversified revenue streams and most EPS upside from current rates. He starts the stock at Overweight with a $37 price target.

His least favorite is LPL Financial (NASDAQ:LPLA), thanks to a lack of clarity on regulatory issues and the business model.